Selling a restaurant that you’ve built with your blood, sweat and tears is hard. But a smart exit strategy can make it much easier.
It’s hard to imagine right now but, eventually, the time will come when we’ll all feel the need to resign or retire or even just step back a little from the all-consuming role of running a restaurant. That might be forty years away or it might be next month but, in either case, the time to begin preparing is now.
Restaurant consultant Tim Muxlow says that only about 20 per cent of restaurants are prepared for their manager or head chef to step back from or out of their roles. He counsels restaurateurs to prepare for that eventuality from day one because incorporating that level of preparedness at the outset will make for a more smoothly running restaurant.
The first step, is to stay on top of things like taxation and accounting. That way, when the time comes to move on, you won’t be pulling all-nighters on the back-room computer. Set aside regular time each month to bring your records up to date and enlist an accountant who you can trust.
There are other systems that need to be in place too. With his company, Food Business Consultancy, Muxlow sets up restaurants from scratch and, he says: “I always organise these restaurants in such a way that they can run without their owners, if necessary, right from the beginning. The way to do that is to document everything. If it’s all typed up, then anyone can do it.”
Muxlow advises owners to keep records of things like: prep lists, recipes, opening and closing procedures, suppliers, maintenance and repair technicians, order forms, minimum stock level requirements, cleaning rosters, detailed job descriptions that include daily, weekly, monthly and annual responsibilities, and up-to-date contact details for all employees.
“I put those systems in place when I was a chef because chefs go on holidays. Or they fall ill. All staff need to know how to do everything. And when someone leaves, it makes it easy to train a new person without too much disruption to business.”
The worst case scenario
Sydney restaurateur, Lou Hunt, had to make use of all those systems last year, when she was involved in a serious motorcycle accident that precipitated two months off work and the eventual sale of her restaurant, Orto, in Surry Hills. At the time of the accident, her business partner was also away (on his first holiday in five years), so the staff were left to their own devices, and Hunt was gratified to find that the system carried on like clockwork.
“The reason everything ran so smoothly,” she says, “was that I had the best team I could possibly have, and I hadn’t been afraid to impart my knowledge and give them a feeling of ownership and responsibility for the parts of the business in which they were involved. I felt confident that, without either me or my business partner there, the kitchen would run fine, the front of house would run fine, the cash-ups would be fine—because I’d already given them that responsibility and respect, and they gave that respect back in return.”
Orto was the third restaurant/café that Hunt had owned or co-owned in Sydney (the others were Poppy’s in Balmain and Baffi & Mo. in Redfern) and, she says, “I’m learning with every shop I open. The most important thing I’ve learnt is that the business can’t be all about me. If you’re standing behind the coffee machine every day for four years, then you need to move away, that comes as a big shock to customers. I want to implement that lesson in my next business. I want the business to be less reliant on me being there every minute of every day, and I hope that might free me up to be a little bit more creative, to spend more time on management, or even open a second restaurant.”
When it’s time to go
When the time does come to leave, an emotional preparedness is also necessary. “It’s not easy to do—moving on,” says Hunt. “You put a lot of blood, sweat and tears into building these babies from scratch, and it’s quite an emotional thing when you have to hand them over. There are always a lot of tears. It’s hard to leave the staff and it’s hard for them, not knowing what the new owners will be like. So I try to prepare them as well as I can. I think that, as long as you’re honest and you’re openly communicating about the reasons for the change and what they can expect, then everything should run relatively smoothly. I’ve been out of Orto for four months now and, in that time, I think only one member of staff has left, and that was to travel.”
When Hunt sold Orto and Baffi & Mo., she spent a fortnight working with the new owners to help smooth the transition. When Muxlow sold his business, he stayed on for a month. Both say that, whether you’re stepping back from your role or from the entire enterprise, there are a lot of personal things you can do at this time to make the transition easier. Hunt set up meetings with each member of staff, one by one, to introduce the new owner and answer their questions. She also set up face-to-face meetings with suppliers.
Passing the baton
Muxlow introduced the new owners to regular clients as well, and passed on inside knowledge. Some of the information that could be shared with new owners or staff might include regular customers’ names, their usual coffee orders, whether they like their steak well done or their eggs over easy. You don’t realise, when you’ve been in the kitchen or behind the counter for a while, just how many bites of information you’ve accrued that contribute to the smooth running of your business.
The most important piece of advice that both Muxlow and Hunt have to offer is: plan ahead. “I didn’t dream, when I set up those restaurants, that I would ever sell either of them,” says Hunt. “I thought I would be there forever. I’m now planning the next venture and I’d like to stay with this one, or even have a couple running concurrently. You can’t foresee the future, so it’s best to be prepared.”